Headlines

Euro zone officials are exploring ways to solve one of the thorniest issues they face: how to ensure distressed banking assets are dealt with at a national level while also breaking the link between indebted governments and their banks, Reuters reported. EU leaders agreed in June that the region's bailout fund, the ESM, should be allowed to directly recapitalize banks once a single euro zone supervisor is in place, probably during 2013. Such recapitalizations would, the leaders said at the time, break the "vicious circle between banks and sovereigns".

At first glance, the shop on a nondescript street in this chaotic capital looks standard-issue military, The Washington Post reported. Fatigues. Camouflage. Hunting gear. Deeper inside, the political message emerges. Black T-shirts emblazoned with modified swastikas — the symbol of the far-right Golden Dawn Party — are on sale.

Banks must face up to the issue of restructuring rather than just deferring problem SME loans, the deputy governor of the Central Bank said yesterday, the Irish Times reported. Matthew Elderfield also warned an audience of compliance officers that the Central Bank will conduct a third series of stress tests on Irish banks over the next year to satisfy itself that they were now sufficiently capitalised for the medium term.

Brazil's central bank seized Banco BVA SA on Friday, the latest sign of strain facing the nation's small-sized lenders following years of fast credit-fueled growth, Reuters reported. Deteriorating financing conditions and a breach of regulations at the Rio de Janeiro-based lender were cited as the main reasons behind the decision, the central bank said in a statement. Banco BVA had in recent weeks been at the center of speculation over a potential collapse.

Tens of thousands of Greeks joined a second nationwide strike in three weeks on Thursday, moving to bring the country to a near standstill in a bid to show European Union leaders meeting in Brussels that new austerity cuts being demanded by Greece’s lenders would cripple society and further depress the economy, the International Herald Tribune reported. Protest rallies began peacefully but were disrupted when demonstrators broke away from the crowd near Syntagma Square outside Parliament and threw rocks, bottles and firebombs at the police, who responded with tear gas.

Germany is proposing to toughen Greece’s access to international aid by setting up an escrow account outside its reach to guarantee payments of interest and debt to creditors, a government official said, Bloomberg reported. Finance Minister Wolfgang Schaeuble, who suggested that Greece will get more aid even while struggling to meet the conditions, wants a lasting solution to the country’s debt crisis to restore confidence in financial markets, the official, who asked not to be named, told reporters.

European Union leaders took a big stride towards establishing a single banking supervisor for the euro zone, striking a deal under which the bloc's rescue fund could start recapitalising ailing banks next year, a French government source said, Reuters reported. The source told reporters at an EU summit that all 6,000 banks in the single currency area would come under European Central Bank supervision by 2014, but most day-to-day oversight would be delegated to national bodies.

Spain's debt costs retreated further from their dangerous summer highs Thursday, helped by favorable ratings news and growing hopes that the government will request a bailout, The Wall Street Journal reported. A Spanish bond auction attracted solid demand after Moody's surprised investors late Tuesday by leaving Spain's investment grade rating unchanged. It was widely expected to relegate it to junk status. Moody's pinned its decision on the increasing likelihood of the country asking for financial assistance from the European Union.

Ontario has the greatest risk of defaulting on its debt payments in the next 20 years, while energy-rich Alberta places a surprisingly close second in a ranking of provinces seen as most vulnerable to suffering a Europe-style financial crisis, The Globe and Mail reported. “In the medium to long term, public finances in several provinces are unsustainable, raising the spectre of debt crises, damaged credit ratings and federal bailouts if corrective steps are not taken,” according to a report released Thursday by the Ottawa-based Macdonald-Laurier Institute.

The Bank of Japan's policy board, under growing political pressure, is expected to consider fresh easing measures at its coming meeting after concluding that its goal of reaching a 1% rise in prices is more than two years away, according to people familiar with the bank's thinking, The Wall Street Journal reported. The BOJ is due to release its initial forecast for the fiscal year beginning April 2014 at the Oct. 30 meeting in its semiannual outlook report on the economy and prices.